Most of the attention at this week's ASEAN foreign ministers meeting in Manila focused on the failure of ASEAN to reach a definitive approach on establishing a human rights body for the grouping. The proposed ASEAN Charter is supposed to address human rights concerns through this new entity. Perhaps given the diversity in governance standards among members, this was to be expected.
Far less attention has been paid to deficiencies in the foundations for the ASEAN Economic Community (AEC). Although the ASEAN Charter views ASEAN economic integration as the basis for continuing integration in other areas, the draft charter does not support this goal with a sufficient framework.
Comparing ASEAN with other major markets -- the EU, India, China, Japan and the North American Free Trade Agreement (NAFTA) countries of the US, Canada and Mexico -- illuminates some of the continuing gaps in the AEC.
First, economic actors, whether sole proprietors or corporate entities, should have opportunities to interact with those responsible for policymaking affecting the markets. In nations such as China, India and Japan, economic actors can lobby government agencies or petition legislatures on economic policymaking. In supranational entities such as the EU and NAFTA, economic actors can deal with supranational bodies such as the European Commission or the NAFTA Secretariat.
Such opportunities for business-government interaction are ad hoc and insufficient in the current ASEAN setup. Currently economic actors in ASEAN must deal with individual member states as well as the ASEAN Secretariat. Dialogues regarding ASEAN economic institutions are irregularly scheduled. This results in confusion.
To paraphrase Henry Kissinger, when I want to talk to ASEAN, whom do I call and when can I call? ASEAN should empower the ASEAN Secretariat with greater authority for dealing with the AEC, as well as provide for regular dialogue sessions for ASEAN ministers meeting at the proposed ASEAN Council meetings. This will provide regular opportunities for meaningful dialogue.
Second, economic actors expect some regularity and structure in the policymaking and rulemaking of the market. In nation-states, economic actors know there is a hierarchy of rules and laws applicable to their market activities. Although these may appear inconsistent at times to varying extents among nation-states, in each nation state there remains a national establishment that provides some cohesion. In supranational markets such as the EU and NAFTA, defined hierarchies of treaty and law provide for regularity in their markets.
The ASEAN economic institutions, on the other hand, do not have such cohesion or regularity. Currently disputes regarding the ASEAN Free Trade Area (AFTA) can take years to resolve because of disagreements among the members. ASEAN members have no obligation to follow decisions made elsewhere affecting the AFTA, and national bureaucracies often appear unable or unwilling to do so. The ASEAN Secretariat's coordinating functions regarding the AEC should be strengthened, and a governing body of AEC law - reflecting the basic principles of the AEC, as well as decisions and rulings made at the ASEAN regional level - should guide decisions made by ASEAN members affecting the AEC.
Third, economic actors want the ability to safeguard their interests through dispute resolution should arbitrary policymaking affect them. In nation-states, economic actors can go to court. In the EU economic actors can go to the European Court of Justice, and in NAFTA they can seek arbitration.
In ASEAN, economic actors have no such rights. ASEAN dispute resolution can be invoked only by ASEAN governments, not individuals or companies. Furthermore, a deep-seated reluctance among ASEAN governments to invoke dispute resolution makes it difficult for economic actors to convince ASEAN governments to go to dispute resolution. As a result, the ASEAN dispute resolution process has almost never been used. The ASEAN Secretariat has offered an ombudsman system for companies to report problems with the AEC, but that may merely serve as a glorified "suggestion box" for complaints. Without the ability to seek dispute resolution, ASEAN governments will not take such complaints seriously. ASEAN needs to improve on this system by providing economic actors direct access to the dispute resolution system.
The AEC promises to encourage economic development for the 560 million citizens of ASEAN. However, without a stronger foundation, economic actors will compare the AEC unfavorably with India, China and other major markets. Economic actors will accordingly either impose a price premium on their dealings with the AEC, or simply move their investments elsewhere. Either outcome would be unfortunate for the AEC, which holds out so much promise. The AEC therefore needs continued support and development of its foundations. Otherwise it will become a market with fewer and fewer customers.